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I. INTRODUCTION
Federalism is the cornerstone of the Constitution. Yet, federalism is too often confused by both admirers and detractors with state autonomy, popularly known as "states' rights." The constitutional system of federalism assigns powers to state and federal government officials not for their own benefit, but for that of the people. These benefits are many, including the satisfaction of diverse preferences and competition both among the states themselves and between the states and federal government. While state autonomy plays a large role in sustaining the benefits of federalism, the federal government also has an important role to play in creating a framework of open trade and investment that assures that states will deliver these benefits. Sometimes federalism can be protected by only restricting the power of state governments, rather than strengthening it.
In our federal system, the people, to use economic terminology, are "principals" and state and federal officials merely their "agents."1 This allocation of roles creates the possibility that principal-agent problems will arise in the maintenance of federalism when the interests of elected officials diverge from those of ordinary citizens. The structure of federalism thus must be protected against the machinations of both federal and state officials. Often, the interests of the latter conflict with this structure no less than those of the former.
This Article defends the distributional model of federalism and the principal-agent model of its enforcement, arguing that together they have profound implications for modern federalism jurisprudence. The political process will not always protect the Constitution's beneficial distribution of power, because the people's agents-federal officials and state officials alike-are primarily motivated by their own political interests. These interests, however, have no necessary connection to the maintenance of the distribution of powers set out in the Constitution. Officials will thus often use the initial distribution of powers assigned by the Constitution as chips to trade or indeed to surrender rather than systematically defend.2 Because of their rational ignorance of public policy, citizens will not consistently protect federalism, particularly because it is a complex issue of governmental structure that lacks political salience compared to the pressing public policy issues of the day. Accordingly, it is fundamentally misguided to claim, as do some commentators, and occasionally the Supreme Court, that the political...